Leading with purpose when stakeholder management gets geopolitical

Everyone can win together

One criticism of stakeholder management has been the notion that the clashing needs and interests of so many diverse stakeholder groups could ever be reconciled, making the process of formulating a coherent business strategy a bit like herding cats. On the other hand, a government stakeholder that dictates business policy at the expense of workers, suppliers or the environment is no better, just as managing a business only so that shareholders profit has also been found wanting.

To the latter point, research by Jeroen Neckebrouck critiques the use of shareholder returns as the sole proxy for a firm’s competitive advantage. He analyzed over 14,000 Belgian firms, looking specifically at the workforce as a key stakeholder. Firms that paid their workers above market rates meant there was less remaining profit recorded on the balance sheet, but that was in no way an indication these firms created less value than firms that underpaid their workers. In fact, these firms may create more total value but simply decide to distribute it differently among key stakeholders. Paying higher wages to employees or higher rates to suppliers might also attract better and more loyal ones, giving these firms a competitive advantage over lower-paying firms. Yet you wouldn’t necessarily know it just by looking at how much profit went to the shareholders. Competitive advantage requires a broader view.

This provides empirical support for the new stakeholder perspective in strategy, in the tradition of the resource-based view (RBV) of the firm espoused by Jay Barney and others, which calls for incorporating a broader stakeholder perspective to understand why some firms create more value than others and hold competitive advantage. Prioritizing one stakeholder (in this case, shareholders) over all others is a “deeply flawed” logic, as Barney states.

The key, then, is in aligning the interests of all parties, governments included. So insisted Colin Mayer, speaking at the 2025 IESE-ECGI Corporate Governance Conference in Madrid. At present, rash decisions are being made at the expense of other stakeholders. It’s not fair that harms are being borne by those who didn’t cause them and shouldn’t have to bear them. Instead, when everyone accepts that success derives from profiting without harm, and they don’t seek to divert or transfer the value (or harm) to others, then everyone can win together.

“Mutually reinforcing interests promote partnerships between businesses, investors, governments, customers, employees, suppliers and communities in committing to a common purpose of shared prosperity,” he said.

It’s a big challenge for stakeholder management when the geopolitical environment currently frames everything in zero-sum terms. But a solution is hinted at in those two little words of Mayer’s: common purpose.

Stakeholder decisions easier if your purpose is clear

If navigating the geopolitical world requires a compass, then purpose is your true north.

As Mike Rosenberg observed in conversations with CEOs during the COVID-19 pandemic,
“Companies that had a clear sense of purpose weathered the crisis better.” Relating that to how business leaders should react to Trump 2.0 today, he stressed: “We all need to think about who we are, what we’re willing to do and not do, and what we really stand for.”

Jordi Canals, in his report on strategy in times of geopolitical disruption, elaborates: “A clear and well-defined purpose is a reliable point of reference that facilitates decision-making in times of increased uncertainty.”

On top of all the usual factors that a company and its directors must assess when formulating strategy — efficiency, market access, organizational design — the introduction of heightened geopolitical risk and more activist stakeholders in the form of interventionist governments makes having a clear, guiding purpose more necessary than ever.

This is not to say that it will be easy. But purpose, and the values that underpin it, will help ensure that the decisions you make with reference to your stakeholders are authentically aligned.

With ESG or DEI, for example, does your corporate purpose tell you to scrap those commitments? Or do you do what Rosenberg finds some companies are doing, which is, “changing the job title for the people doing that work but the work still goes on, because in the long term, they believe it’s the right thing to do, but for now they will just talk about it less”?

“I think these kinds of stakeholder decisions are easier to make if you have your purpose clear from the start,” he says. “What’s harder is to follow the constant, emotional back and forth of the political news cycle.”

John Almandoz agrees, which is why he proposes an inside-out approach to purpose — meaning start with your internal values and organizational member motivations that shape your daily operations to serve customers. Letting external forces or the single loudest stakeholder define your purpose for you is a recipe for disaster, and you will end up lurching from one politically charged crisis to the next.

“A key advantage of the inside-out approach is its ability to foster unity, both within the organization and with external stakeholders, as it is freely chosen by all and is less likely to spark disagreement. That unity and inspiration should, in turn, bring greater engagement and productivity,” Almandoz explains.

With your purpose clear, it can then help to map your stakeholders and their interests, paying special attention to the power and influence they can exert over you, both now and in the future. There are plenty of tools available to do this, and it’s an exercise that should be done in conjunction with the board and its committees.

Throughout this process, even though your stakeholders may hold polar opposite positions, you may be able to find areas of overlap that are in keeping with your purpose and values. As The Economist article on “the new stakeholderism” points out, “what America’s two political tribes want from business is not always the same … but both Democrats and Republicans are eager for corporate America to churn out middle-class jobs while remaining one step ahead of China in the race for technological supremacy.” And therein may lie a shared path to a business decision that more people can live with. That, in turn, will deepen trust, which is what turns wary stakeholders into allies again.

And trust is sorely needed, as highlighted by a panel on the state of democracy at IESE’s Geopolitics Summit in Madrid. Moderator Pedro Videla noted that people’s faith in democracy was waning. Indeed, a recent U.K. survey on “Gen Z: Trends, Truth and Trust” found more than half (52%) of young people age 13 to 27 thought the U.K. would be better off under a dictatorship and a third also believed it would be better if the army were in charge. This paints a worrying picture for stakeholder management in the future.

Yet in this moment, companies have an opportunity to take a stand, coalescing stakeholder interests not around partisan politics but around common purpose, achieving business success by aligning, not alienating, those who have a stake in the outcome.

MORE INFO:

“Globalization, Digitization and Politicization: 3 trends that will change how you manage” by Fabrizio Ferraro and Bruno Cassiman.

“Rethinking competitiveness in an era of stakeholder returns,” based on the Strategic Management Journal paper, “Empirically exploring the veracity of the new stakeholder perspective in strategy: documenting workforce rents” by Jeroen Neckebrouck and David Kryscynski.

“Shareholders’ role and responsibilities in times of corporate disruptions,” a summary of presentations from the 2025 IESE-ECGI Corporate Governance Conference, edited by Marco Becht and Jordi Canals.

“Strategy and Geopolitics in Trump 2.0,” an e-conference with Mike Rosenberg, is available for Members of the IESE Alumni Association to watch on demand here.

“Estrategia de la empresa ante cambios geopolíticos disruptivos” by Jordi Canals.

“How an inside-out approach to corporate purpose boosts business performance,” based on the Strategy Science paper, “Inside-out and outside-in perspectives on corporate purpose” by John Almandoz.